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Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News.

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Speaker 2: Hello and welcome to another episode of the Odd Lots podcast.

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Speaker 3: I'm Joe Wisenthal and I'm Tracy Alloway.

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Speaker 2: Tracy, have you noticed there were some crazy moves in

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Speaker 2: the market lately.

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Speaker 3: I know, it's kind of funny if you look at

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Speaker 3: I guess traditional measures of overall volatility in the market.

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Speaker 3: So obviously things like the vis it was relatively low

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Speaker 3: up until recently, and that was despite all these big

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Speaker 3: surges in a bunch of stocks. So the megacap tech

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Speaker 3: companies kind of stand out there. So I guess overall

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Speaker 3: benchmark moves were kind of low. But if you look

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Speaker 3: within that, if you look at specific single stock performance,

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Speaker 3: things like dispersion, it's been kind of crazy, sort of

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Speaker 3: under the surf, there's been a lot going on.

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Speaker 2: We are recording this February fifteenth, twenty twenty four shares

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Speaker 2: of super Micro. I don't know what they do. I

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Speaker 2: know they do something with AI. They're currently at nine

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Speaker 2: to fifty one, up sixty nine dollars a share on

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Speaker 2: the day. On January eighteenth, they were at three hundred

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Speaker 2: and eleven, so it's a triple in a month. There

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Speaker 2: was some armholdings recently, which is like now in one

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Speaker 2: hundred and fifty billion. I mean, these are like serious

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Speaker 2: high market cap companies I do.

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Speaker 3: They're call these upcrashes.

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Speaker 2: Up crashes, that's the word that I use. So it's

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Speaker 2: something like, here's just a company that's been around for

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Speaker 2: a while, mature people understand it. It was a sixty

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Speaker 2: five billion dollar company a couple of weeks ago, it's

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Speaker 2: currently one hundred and twenty eight billion dollar company. Just

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Speaker 2: these big fat, chunky moves in both directions that we're saying.

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Speaker 3: Yeah, And on the one hand, obviously you can describe

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Speaker 3: it all to investors are getting really excited about things

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Speaker 3: like AI and again a lot of the movement we've

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Speaker 3: seen happen in tech stocks. But on the other hand,

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Speaker 3: it feels like there might be something else going on here.

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Speaker 3: And every once in a while I hear people talking

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Speaker 3: about multi strategy funds and the impact that those might

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Speaker 3: be having on these overall market moves.

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Speaker 2: Totally like these sort of moves that just keep going

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Speaker 2: in one direction over and over again. Speaking of multi

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Speaker 2: strategy hedge funds, which we're going to get into and

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Speaker 2: understand how they work and maybe if they are sort

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Speaker 2: of like changing the complexion of house docks trade these days.

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Speaker 2: I think there's been a lot of launches of them,

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Speaker 2: so we know that some of them have done really well,

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Speaker 2: and of course we've regaled with the incredible returns a Citadel.

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Speaker 2: But I think we're starting to see a lot of

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Speaker 2: people who were at those shops launch their own multi

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Speaker 2: strategy shops. So there was a good article too on

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Speaker 2: Bloomberg just this week talk about like, not only are

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Speaker 2: they proliferating, but for years they talked about how the

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Speaker 2: two and twenty model was fading. Like you and I

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Speaker 2: have probably heard that our whole career, it's going away

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Speaker 2: because they're making they're taking in more than that, and

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Speaker 2: I think they're like keeping like half the profits that

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Speaker 2: they make, so like twenty percent to sort of old

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Speaker 2: hat like, so these are huge money making machines.

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Speaker 3: Now is this is this pod Lots?

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Speaker 4: I think it's pod Lots.

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Speaker 2: This is the original pod Lot.

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Speaker 3: So there's only three things I really know about multi

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Speaker 3: strategy shops, which is like one, they're very hot right now,

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Speaker 3: and as you say, we have seen a lot of

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Speaker 3: launches recently. Two, I think they trade a lot, like

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Speaker 3: just in terms of absolute volume. I think they're very

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Speaker 3: active and becoming increasingly active in a bigger portion of

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Speaker 3: the market. And then three, I hear a lot of

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Speaker 3: talk about measuring performance scientifically and like the things they

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Speaker 3: do differently to maybe a traditional long short fund, but

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Speaker 3: I don't actually know what it means in detail. And

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Speaker 3: then also, as you were saying, I don't actually understand

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Speaker 3: completely the market impact. I think there are a lot

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Speaker 3: of different theories at the moment of how they might

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Speaker 3: be impacting the market. So I'm very excited about this conversation.

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Speaker 2: Yeah, tons of questions on a big and growing topic

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Speaker 2: that we should talk about more. So I'm excited. We

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Speaker 2: have the perfect guests. We're going to be speaking with

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Speaker 2: Krishna Kumar. He is the founder of goose Hollow Capital.

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Speaker 2: He previously ran pod capital at the Multi Strat Hedge

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Speaker 2: Fund MKP. He was also previously at Omega, and he

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Speaker 2: is going to talk about how these places work and

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Speaker 2: the sort of impact they have on house dogs trade. So, Krishna,

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Speaker 2: thank you so much for coming on Oudlacks.

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Speaker 4: Hey excited to be here, A big fan of the show.

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Speaker 2: What does a pod shop? Let's just start there, because

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Speaker 2: I have some idea of like this big fund. This

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Speaker 2: is what I think in my head. You have a

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Speaker 2: big fund with a bunch of money, a bunch of teams.

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Speaker 2: Maybe you have like a handful of people on each

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Speaker 2: all working for themselves. The better the teams do, presumably

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Speaker 2: they get more money, more resources, more capital to trade.

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Speaker 2: If they do badly, they're on a short leash. They

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Speaker 2: can be fired quickly, and somehow they make a lot

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Speaker 2: of money with that. But that is probably like the

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Speaker 2: extent of what I actually understand about how they work.

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Speaker 2: What are they So.

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Speaker 4: If you think about most hedge funds that people talk about,

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Speaker 4: most of them are now multi strategy funds, and that

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Speaker 4: are made of a bunch of pots underneath. So if

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Speaker 4: you go back in time to the first hedge fund

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Speaker 4: that ever started, A W. Jones, I mean that was

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Speaker 4: in some sense a manager with all these underlying analysts

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Speaker 4: who are then picking up looking at radious sectors and

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Speaker 4: running strategies right. And the evolution to that today is

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Speaker 4: this monster called the multi strategy fund, and it's sort

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Speaker 4: of a platform. So if you think about our economy,

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Speaker 4: we're very good at creating platforms out of things. So

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Speaker 4: if you take Apple as a company, Apple is a

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Speaker 4: platform company. They don't actually produce anything. They come up

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Speaker 4: with ideas. They come up with this vision pro and

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Speaker 4: then they get a bunch of people overseas to make them,

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Speaker 4: and then they market it. So the similar kind of

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Speaker 4: concept in hedge fund space is this idea of multi

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Speaker 4: strategy platforms and parts of the units that are working

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Speaker 4: within that platform.

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Speaker 3: So you actually work in a multi strategy fund. At

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Speaker 3: one point, I believe I'm curious how that platform idea

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Speaker 3: drives the culture. But then also like, what exactly is

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Speaker 3: the competitive edge that a multi strategy fund or a

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Speaker 3: pod shop is offering here? Is it just we're able

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Speaker 3: to select the best managers of individual strategies and put

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Speaker 3: them together in one place, like what makes a successful

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Speaker 3: multi strategy fund?

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Speaker 4: So yeah, so this is again is a sort of

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Speaker 4: part of the evolution. So if you go back in time,

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Speaker 4: we used to have this construct of single manager hedge funds,

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Speaker 4: which in the nineties were fairly big, and then people

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Speaker 4: said they wanted to get the average hedge fund performance.

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Speaker 4: Just like people like to buy the index, they wanted

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Speaker 4: to buy the index of hedge funds, and there wasn't once,

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Speaker 4: so they created something called the fund funds, which just

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Speaker 4: added fees on fees, so essentially you had underlying Hetch funds,

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Speaker 4: and then there was a fund manager that selected these

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Speaker 4: hedge funds, and they did extremely well from two thousand

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Speaker 4: to two thousand and seven, and then in eight also

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Speaker 4: so bad things happened. But what we found out was

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Speaker 4: fund of funds, the earlier iteration of the multi strategy

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Speaker 4: fund had all the downside and less of the upside,

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Speaker 4: because what we had in eight was a lot of

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Speaker 4: the underlying managers did poorly and people just wanted to

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Speaker 4: get out of Hetch funds as a whole, and the

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Speaker 4: hedge funds started to get all these investors, and then

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Speaker 4: the fund of funds, which were one level removed from them,

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Speaker 4: also gated the underlying investors, right, So that created this

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Speaker 4: whole thing where fund of funds as a concept became

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Speaker 4: not a great idea. And so the next version of

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Speaker 4: that now is this multi strategy fund. Essentially, you want

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Speaker 4: to get in of different managers returns, and you don't

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Speaker 4: have the ability to do that yourself, so you go

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Speaker 4: to a multi strategy platform and you end up getting

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Speaker 4: a whole bunch of managers as a composite Oh see, So.

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Speaker 3: It's not necessarily outperformance, although there are a lot of

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Speaker 3: multi strategy funds out there that seem to be outperforming,

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Speaker 3: but more the diversification benefits.

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Speaker 4: Yeah, I think it is. I mean, if you think

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Speaker 4: about the average multi strategy fund, they have lots of

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Speaker 4: uncorrelated strategies, right, So they have, you know, a typical

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Speaker 4: multi strategy fund. The core of it, it's some sort

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Speaker 4: of quant strategy like a stat art strategy. Pretty much

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Speaker 4: every large multi strategy fund is built around that. And

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Speaker 4: then you have fixed income RV, credit RV, macro RV,

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Speaker 4: and then macro directional which is what I do, and

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Speaker 4: all of that is put together into a composite performance profile.

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Speaker 4: So given that all these strategies are sort of orthogonal,

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Speaker 4: over time, you tend to benefit from the lack of correlation.

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Speaker 4: And that's one of the biggest benefits that investors see

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Speaker 4: when they allocate to multi strategy funds.

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Speaker 2: So someone sets up the pod shop. Someone is the

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Speaker 2: you know, runs the whole platform so to speak, and

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Speaker 2: brings in fund managers and fires fund managers who are

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Speaker 2: doing these different strategies. What does that person have to

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Speaker 2: be good at for the platform to work.

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Speaker 4: Yeah, so if you think about platforms, so if you

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Speaker 4: think about Apple as a platform, Apple is good at

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Speaker 4: coming up with cool ideas and marketing it. So if

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Speaker 4: you take a multi strategy fund, the platform owners have

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Speaker 4: to be good at raising capital obviously because that's one

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Speaker 4: of the biggest things you need, and then you have

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Speaker 4: to be good at risk management and the operational infrastructure.

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Speaker 4: So what they're providing in a sense is providing all

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Speaker 4: the stuff that's not investment related to the underlying pods,

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Speaker 4: so the pots can go about doing their investing and

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Speaker 4: then the platform provides all the other services.

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Speaker 3: So talk to us about what multi strategy funds are

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Speaker 3: actually doing here, because I think about a traditional hedge fund,

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Speaker 3: maybe something like Pershing under Bill Ackman. There's a charismatic guy,

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Speaker 3: to put it one way, and he's making all these

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Speaker 3: big bets. He's going long or short certain companies. Multi

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Speaker 3: strategy funds. Obviously, the clue is in the name. They

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Speaker 3: have a bunch of different strategies, but typically what are

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Speaker 3: they doing on a daily basis?

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Speaker 4: So I think there's a couple of reasons why they

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Speaker 4: are in prominence, right, So the first and foremost one

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Speaker 4: is that of course, like you have, the regulatory burden

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Speaker 4: of a single manager hedge fund has gone up dramatically,

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Speaker 4: So if you are a single person and you want

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Speaker 4: to start a hedge fund, it's much more complicated now

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Speaker 4: than it was twenty years ago.

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Speaker 3: This is like the key man risk aspect of it.

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Speaker 4: Well, a key mand risk, but also the operational infrastructure

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Speaker 4: you need and the support and all the other regulatory

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Speaker 4: burdens that come with it is tremendous. So that's one

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Speaker 4: aspect of the thing multi strategy fund is solving. But

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Speaker 4: the other thing is the multi strategy fund is technically

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Speaker 4: looking for good managers and providing them a platform so

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Speaker 4: that they can actually run their business. And the multi

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Speaker 4: strategy fund, the fund holding company, then provides all the

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Speaker 4: other infrastructure needs like risk management, reporting, all of that

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Speaker 4: fun stuff. But if you think about why they have

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Speaker 4: done so well in the recent past, I mean, part

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Speaker 4: of it is just that, you know, we have this

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Speaker 4: like demand for leverage right in the system. So if

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Speaker 4: you think about like what we did in the global

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Speaker 4: financial crisis, obviously in my view, the fiscal response was

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Speaker 4: very timid, right, Like we spent about three percent of

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Speaker 4: GDP compared to COVID basically spent you know, ten percent

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Speaker 4: of GDP or more. So that meant that our recovery

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Speaker 4: was very, very timid. And there was this whole thing

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Speaker 4: with austerity, not just here but elsewhere too, which meant

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Speaker 4: that yields, real yields collapsed and the overall return you

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Speaker 4: could get on capital collapsed. So the only way for

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Speaker 4: you now to generate any sort of return was to

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Speaker 4: take a lot of leverage, and so hedge funds as

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Speaker 4: a whole are doing that. Like they provide you some

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Speaker 4: form of leverage in terms of access, but the multi

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Speaker 4: strategy funds take it to the next level where one

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Speaker 4: of the biggest problems with a single manager fund is

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Speaker 4: often that you may not have that many good ideas. Right.

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Speaker 4: So if I'm a macro guy, I'm probably lucky if

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Speaker 4: I find four good ideas in a year. Right. The

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Speaker 4: rest of the time, I don't know what to do.

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Speaker 4: You know, I have to keep busy. Now, if you're

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Speaker 4: an investor paying two and twenty in fees, you want

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Speaker 4: all the capital to be deployed at all times and

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Speaker 4: to be invested in all sorts of things. So one

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Speaker 4: of the problems the multi strategy fund solves is to

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Speaker 4: make sure that capital is always deployed, and they do

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Speaker 4: that by applying a lot of leverage. Right, So a

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Speaker 4: typical multi strategy fund, you know, you give them a dollar,

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Speaker 4: they have four or five dollars of exposure, and they

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Speaker 4: have multiple pods that are then essentially deploying a capital.

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Speaker 3: My impression post financial crisis was this idea that leverage

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Speaker 3: was supposed to get more expensive, and it definitely did,

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Speaker 3: I guess for regulated banks, and we saw, for instance,

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Speaker 3: the regulations on things like prop trading. I guess liquidity, coverage,

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Speaker 3: ratio is just everything that makes it more difficult for

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Speaker 3: banks to actually trade on behalf of their clients or

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Speaker 3: for their own books. So how are multi strategy firms

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Speaker 3: get the edge here on leverage?

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Speaker 4: So leverage is always expensive, I mean it was much

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Speaker 4: cheaper ten years ago when interest rates were close to

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Speaker 4: zero everywhere, so you could borrow infinite amounts of money.

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Speaker 4: And so if you think about the performance of these strategies,

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Speaker 4: they've been phenomenal in that period. We need two things

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Speaker 4: for a typical hedge fund or any sort of levered

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Speaker 4: strategy to work, right, The assets you buy have to

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Speaker 4: yield more than the cost of your funding. So if

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Speaker 4: you go back in time, we had a positive upward

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Speaker 4: sloping yield curve, which meant that you could borrow money

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Speaker 4: at one percent and buy assets to three percent, and

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Speaker 4: so you could level that up. And then even when

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Speaker 4: we had you know, two year notes here at half

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Speaker 4: a percent, you could borrow money and buy two year

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Speaker 4: jgbs FX, hedge it back and generated two percent kind

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Speaker 4: of quasi risk free return. And so there were many

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Speaker 4: similar sort of traits that you could do. Historically that

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Speaker 4: was what I think fuel the of these strategies right

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Speaker 4: and now if you come to today, leverage is expensive.

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Speaker 4: Most multi strategy funds are probably funding themselves at SOFA

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Speaker 4: plus some spread, so maybe a six percent, and the

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Speaker 4: coupons you can buy they're all much lower because we

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Speaker 4: have an inwarded yokurve where you know, sofur is much

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Speaker 4: higher than where any any sort of coupon you can buy.

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Speaker 4: So a lot of the strategies that are carry type

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Speaker 4: strategies don't work as well, But then you have all

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Speaker 4: these other sort of quasi RV type thing where you're

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Speaker 4: long and short different things, and those sort of strategies

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Speaker 4: tend to do better in this environment.

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Speaker 2: So in addition to of course all the infrastructure and

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Speaker 2: all that, the importance of a strong risk management at

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Speaker 2: the top. And I want to talk about that further

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Speaker 2: because I can think of a couple of ways in

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Speaker 2: which risk management might be expressed. One is, obviously, people

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Speaker 2: get fired somewhat quickly for poor returns. If a manager's

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Speaker 2: strategy or approach isn't working, they're not going to be

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Speaker 2: held around for long. I imagine another element too is

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Speaker 2: style drift and making sure that pods are actually investing

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Speaker 2: in the way in which they're sort of mandated, because

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Speaker 2: if you want that diversification benefit, you don't want, you know,

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Speaker 2: some random let's say, or some quant strategy or whatever

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Speaker 2: to be like quietly really just going along super micro

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Speaker 2: and in video or finding a way to make just

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Speaker 2: do a buy AI strategy, because that's what's out right

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Speaker 2: now to juice return. So talk to us a little

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Speaker 2: bit more about the risk management component in terms of

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Speaker 2: like allocating capital internally and making sure that the managers

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Speaker 2: are actually not all crowded into the same traits.

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Speaker 4: So this is a super interesting topic, Joe, and I

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Speaker 4: think you know this is I think the most important

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Speaker 4: topic of the moment. So if you think about it,

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Speaker 4: there's a conservation of risk, and it's just like conservation

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Speaker 4: of energy, right, So you know you can't just get

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Speaker 4: rid of risk. It just gets transformed and it gets

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Speaker 4: passed around from one person to the other person, right,

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Speaker 4: because it's a complex system, you know, that's what happens.

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Speaker 4: So if you think about what the multi strategies are doing,

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Speaker 4: in a sense, is what the banks were doing ten

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Speaker 4: fifteen years ago, before the vocal rule and before the

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Speaker 4: dot frank came about. Right. So if you had some

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Speaker 4: off the run treasuries and you know somebody had to

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Speaker 4: sell it, you took it down and you put it

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Speaker 4: on your balance sheet. You know, when I started at

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Speaker 4: Citybank twenty plus years ago, we had twenty people on

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Speaker 4: the spot trading desk and we had an auto trader

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Speaker 4: machine which worked some of the time, but then when

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Speaker 4: something happened, some sort of event happened, the machine would

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Speaker 4: not be able to do it and it would get

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Speaker 4: passed to the humans that were on the desk. Now,

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Speaker 4: you go to Citybank, you'd be hard pressed to find

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Speaker 4: maybe three spot traders, and the machines basically taken over, right,

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Speaker 4: So all of those people that were there, they've all

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Speaker 4: moved to the multi strategy funds. Right. So the typical

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Speaker 4: multi strategy fund has specific pods that are focused on

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Speaker 4: trading one particular asset. So in many cases, you know,

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Speaker 4: you'd have a trader he would only trade five year

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Speaker 4: notes and that's all he's doing, you know, that's all

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Speaker 4: his mandate will allow him to do. And so what

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Speaker 4: this does from a systemic point of view is we've

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Speaker 4: shifted all the risks that was on the bank's balance

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Speaker 4: sheet onto these funds. Right, So which is which is great?

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Speaker 4: I mean, which is not a bad thing. But if

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Speaker 4: you think about how the capitalist now managed, right. So,

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Speaker 4: we always we're very good at coming up with complex

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Speaker 4: formulas to calculate risk and do all that. And we

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Speaker 4: saw that with the VR issues in the past. We

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Speaker 4: had a Black Monday episode with the CPI constant proportion

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Speaker 4: portfolio insurance. It turned out be a bad idea. And

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Speaker 4: then we also start with the CEO crisis where we

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Speaker 4: had you know this you know, single correlation parameter. We

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Speaker 4: were using the models and wasn't capturing the real dynamics

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Speaker 4: in the underlying portfolio, right, so we've always had this

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Speaker 4: issue with you know, creating these mouse traps to manage risk,

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Speaker 4: and often they create other problems. So I think one

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Speaker 4: of the issues now with the growth in the multistrat

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Speaker 4: universe and the fact that they are fairly large, is

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Speaker 4: if you have a stat ar book and you're running,

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Speaker 4: you know, at fifty by fifty start our book, and

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Speaker 4: something happens or you decide like you want to de risk,

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Speaker 4: it's fairly easy. You could probably get out of the

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Speaker 4: whole book in no time. But let's say you are

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Speaker 4: a forty billion dollar fund that now has levered that

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Speaker 4: capital up four or five times, and now something happens

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Speaker 4: and you need to de risk. There is no other

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Speaker 4: side for that trade. There's no balance sheet on the

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Speaker 4: other side. And we saw that in March of twenty twenty.

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Speaker 4: People had all these basis traits because if you think

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Speaker 4: about it, when you don't have carry, when you don't

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Speaker 4: have an upward sloping eel curve, a lot of the

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Speaker 4: traits tend to be this sort of fixed income RV

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Speaker 4: type stuff where we are doing these spaces stuff, and

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Speaker 4: many of those bases started to blow up in March

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Speaker 4: of twenty twenty, and then the FED literally had into

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Speaker 4: So we have this sort of thing where the size

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Speaker 4: of the overall funds is so big. We have about

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Speaker 4: four hundred billion at the moment, and they're growing at

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Speaker 4: ten to fifteen percent a year, and you take that

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Speaker 4: and you multiply by three to get the actual dollars invested.

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Speaker 4: So they're about a trillion two dollars in these sort

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Speaker 4: of platforms and they're all risk managed the same way.

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Speaker 4: And I think that is the problem we could.

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Speaker 2: Have outside though of the big event, whether it's like

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Speaker 2: a black Bonday day or whether it's outside you know,

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Speaker 2: March twenty twenty, with the relative value in treasury, it's

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Speaker 2: like in normal times, just how would you describe like

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Speaker 2: the sort of day to day blocking and tackling of

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Speaker 2: good risk management of evaluating POTT.

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Speaker 3: Just to add to that, I'm really curious so multi

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Speaker 3: strategy funds, it's a collection of different strategies obviously, so

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Speaker 3: how are risk managers getting a sort of holistic view

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Speaker 3: of that business? And then also I'm super curious if

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Speaker 3: they're all using the same software. Like I remember writing

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Speaker 3: about Black Rocks Aladdin and the portfolio management tool there

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Speaker 3: like almost a decade ago now, But I'm curious, is

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Speaker 3: everyone using the same sort of system to do this?

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Speaker 4: Well, I don't know about all of them, but you know,

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Speaker 4: I can say that, you know, the risk thinking is

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Speaker 4: kind of similar in a lot of these firms in

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Speaker 4: the sense that imagine you had a dollar and you

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Speaker 4: levered it up to four dollars. Now you want to

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Speaker 4: make sure, let's say you've promised your LPs that you're

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Speaker 4: not going to lose more than ten percent. You know,

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Speaker 4: you want to manage each of the underlying strategies that

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Speaker 4: you've deployed capital into to not lose more than three percent, right,

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Speaker 4: because then, by definition, if all of them lose at

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Speaker 4: the same time, you've now blown through your ten percent limit.

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Speaker 4: So that means that they all end up with some

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Speaker 4: sort of risk management that is not necessarily bad when

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Speaker 4: you look at the platform as a whole, but from

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Speaker 4: the perspective of what it does on a system stomic basis,

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Speaker 4: it's not great. So I know, Joe mentioned this thing

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Speaker 4: about the basis blowing up in March or twenty twenty,

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Speaker 4: but you have this episode every other month where you

404
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Speaker 4: could have some random event which has nothing of any

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Speaker 4: real significance, could cause like a little unwind of positions, right.

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Speaker 4: So what I mean by that is, so let's say

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Speaker 4: you're going into the Polish elections last year in September,

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Speaker 4: you look at Polish rates and europoland the currency all

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Speaker 4: kind of started to move in the wrong direction, meaning

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Speaker 4: Polish rates blew up and Europoland started a rally. And

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Speaker 4: part of the issue there is that when you have

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Speaker 4: a whole bunch of strategies that are all kind of

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Speaker 4: risk managed the same way, it's no longer about the fundamentals, right.

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Speaker 4: If the P and L starts to move in a

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Speaker 4: certain direction, you now have to de risk your book,

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Speaker 4: and that causes these events.

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Speaker 2: Well, this is what I really want to get it

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Speaker 2: because I want to talk about you know, you could

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Speaker 2: see the chart of RPL and it shoots up and

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Speaker 2: then a month later it's back to where it was.

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Speaker 2: What is that day to day risk management process that

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Speaker 2: causes trades to all go in one direction like that? Again,

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Speaker 2: like outside of like the crazy times where it's like

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Speaker 2: a pandemic hit like day to day, if I'm a

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Speaker 2: manager at a pod shop and I have like the

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Speaker 2: platform over me evaluating my risk, like talk to us

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Speaker 2: about that process and how that informs the risks I'm

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Speaker 2: willing to take.

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Speaker 4: Yes, the risk management is almost algorithmic, right, So it's

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Speaker 4: not even because I don't think it. It'd be very

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Speaker 4: hard for the risk manager at some massive pot to

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Speaker 4: know every individual position, so they don't really kind of

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Speaker 4: they kind of understand the whole thing, but they don't

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Speaker 4: necessarily know that you know X or wise you know

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Speaker 4: what it is. So so essentially what happens is your

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Speaker 4: P and L kind of drives risk management. Right, So

437
00:23:53,280 --> 00:23:57,479
Speaker 4: if you draw down capital, you know you're getting delevered, right,

438
00:23:57,680 --> 00:24:01,360
Speaker 4: and not only are you getting delevered. Let's take Poland

439
00:24:01,480 --> 00:24:04,240
Speaker 4: is a good example, and we have a position in Poland,

440
00:24:04,280 --> 00:24:08,240
Speaker 4: so we kind of followed closely. So imagine now you're

441
00:24:08,280 --> 00:24:10,679
Speaker 4: at a POD and now you have a Europoland position.

442
00:24:10,760 --> 00:24:13,320
Speaker 4: Now you have to take it off because you know

443
00:24:13,359 --> 00:24:15,439
Speaker 4: it's gone against you, and you you know if you

444
00:24:15,480 --> 00:24:18,240
Speaker 4: lose more than three percent, you're going to get capital

445
00:24:18,320 --> 00:24:20,560
Speaker 4: is going to get cut in half, and you lose

446
00:24:20,600 --> 00:24:23,240
Speaker 4: five six percent, you're probably getting stopped out, right, So

447
00:24:23,280 --> 00:24:27,480
Speaker 4: that's typically how the pot capital gets allocated. So now

448
00:24:28,000 --> 00:24:31,679
Speaker 4: you are now de risking that Europoland position. Which then

449
00:24:31,760 --> 00:24:34,399
Speaker 4: causes everybody else to also de risk as well. So

450
00:24:34,840 --> 00:24:37,480
Speaker 4: it's not even like a risk management thing. It's just

451
00:24:37,560 --> 00:24:42,040
Speaker 4: the structure where everybody is allocating capital in the same way,

452
00:24:42,600 --> 00:24:45,439
Speaker 4: which means that like an innoquous thing, like you know,

453
00:24:45,560 --> 00:24:49,120
Speaker 4: somebody literally coughing at some place causes something to move

454
00:24:49,160 --> 00:24:51,280
Speaker 4: and then next thing, you know, a whole bunch of

455
00:24:51,280 --> 00:24:53,080
Speaker 4: people have to unwind the positions.

456
00:24:53,840 --> 00:24:58,080
Speaker 2: So diversification in investing is generally good and people like it.

457
00:24:58,119 --> 00:25:00,359
Speaker 2: And one way you can diversify is over time. So

458
00:25:00,400 --> 00:25:03,200
Speaker 2: it's like in theory, you know, it's like people buy

459
00:25:03,280 --> 00:25:05,560
Speaker 2: the SMP every two weeks in there four one k

460
00:25:05,760 --> 00:25:09,000
Speaker 2: or something like that. But it sounds likely your example

461
00:25:09,240 --> 00:25:12,640
Speaker 2: is that the pod manager does not have the ability

462
00:25:12,680 --> 00:25:15,040
Speaker 2: to diversify with time, that as soon as the move

463
00:25:15,160 --> 00:25:19,160
Speaker 2: goes against them, they don't really have the luxury to say, yeah,

464
00:25:19,200 --> 00:25:21,200
Speaker 2: well it's just a brief thing and it'll be back

465
00:25:21,240 --> 00:25:25,280
Speaker 2: to normal like that. Mechanically, they can't let it. They

466
00:25:25,320 --> 00:25:27,080
Speaker 2: can't let the position lose for very long.

467
00:25:27,359 --> 00:25:29,919
Speaker 4: Yeah, I think so. And also the other aspect of

468
00:25:29,920 --> 00:25:32,760
Speaker 4: that which you touched upon is the fact that you're

469
00:25:32,840 --> 00:25:38,800
Speaker 4: not maximizing long term returns you're maximizing returns per unit

470
00:25:38,840 --> 00:25:43,000
Speaker 4: of time, right. So, so what it means is, let's say,

471
00:25:43,040 --> 00:25:44,879
Speaker 4: you know, let's take a different example. Let's say you

472
00:25:44,880 --> 00:25:47,840
Speaker 4: have a stock. So any given stock on any random

473
00:25:47,920 --> 00:25:50,280
Speaker 4: day is just some beta to the S and P. Right,

474
00:25:50,359 --> 00:25:52,640
Speaker 4: It's just it's going to move along with the rest

475
00:25:52,640 --> 00:25:55,560
Speaker 4: of the market. Unless there's some stock specific news. It's

476
00:25:55,600 --> 00:25:58,080
Speaker 4: just going to keep up with that, except that when

477
00:25:58,080 --> 00:26:00,280
Speaker 4: you get into an event, like you have have an

478
00:26:00,280 --> 00:26:04,480
Speaker 4: earnings release or Apple's vision pros getting released at that time,

479
00:26:04,920 --> 00:26:07,760
Speaker 4: Now there is actually an event, and now you have

480
00:26:07,840 --> 00:26:09,520
Speaker 4: to take a view on whether it's going to go

481
00:26:10,320 --> 00:26:13,199
Speaker 4: up or down at that point in time. Right. So

482
00:26:13,440 --> 00:26:16,920
Speaker 4: what happens with this sort of pot capital and that

483
00:26:17,320 --> 00:26:20,560
Speaker 4: being a bigger part of the market, is that you

484
00:26:20,720 --> 00:26:24,199
Speaker 4: now have to basically take a view on this event,

485
00:26:24,440 --> 00:26:27,520
Speaker 4: which is an earnings release. Now, if it turns out

486
00:26:27,600 --> 00:26:29,840
Speaker 4: that all the parts think that the earnings are going

487
00:26:29,880 --> 00:26:31,880
Speaker 4: to be good, and if the earnings actually is not good,

488
00:26:32,359 --> 00:26:34,119
Speaker 4: now we know that the stock is going to have

489
00:26:34,160 --> 00:26:37,679
Speaker 4: a massive reaction because you know, everybody will try to

490
00:26:37,680 --> 00:26:40,080
Speaker 4: get out at the first possible time, right, So you

491
00:26:40,560 --> 00:26:44,919
Speaker 4: create these sort of mini crashes in equities and in

492
00:26:44,960 --> 00:26:48,160
Speaker 4: other markets because of the way risk is managed, right,

493
00:26:48,359 --> 00:26:51,280
Speaker 4: I imagine if I were to sort of look at

494
00:26:51,320 --> 00:26:54,479
Speaker 4: my position every day and say, on every little blip,

495
00:26:54,640 --> 00:26:57,199
Speaker 4: I'm going to take all my risks down, and not

496
00:26:57,240 --> 00:26:59,680
Speaker 4: only take my risk down, but take other positions I

497
00:26:59,720 --> 00:27:03,120
Speaker 4: might have also down. That's going to cause these sort

498
00:27:03,119 --> 00:27:06,960
Speaker 4: of systemic events, which I think is actually an opportunity.

499
00:27:06,960 --> 00:27:09,639
Speaker 4: If you're not playing that game and you're playing a

500
00:27:09,680 --> 00:27:12,840
Speaker 4: slightly longer term game, then it's a slightly it's a

501
00:27:12,840 --> 00:27:27,359
Speaker 4: great opportunity.

502
00:27:28,840 --> 00:27:31,520
Speaker 3: So just to hammer this point home, in addition to

503
00:27:31,680 --> 00:27:35,200
Speaker 3: the sort of short termism that you just described, there's

504
00:27:35,200 --> 00:27:38,800
Speaker 3: a sort of reflexivity that's happening here too, where if

505
00:27:38,800 --> 00:27:41,800
Speaker 3: a position starts to trade against you and everyone gets

506
00:27:41,800 --> 00:27:44,560
Speaker 3: out at the same time, that makes it worse. But

507
00:27:44,680 --> 00:27:47,560
Speaker 3: also if a position is going in your favor, then

508
00:27:47,600 --> 00:27:50,879
Speaker 3: everyone crowds in and that gives it momentum and it

509
00:27:51,080 --> 00:27:55,160
Speaker 3: sort of exacerbates the up crashes. As Joe would say.

510
00:27:55,440 --> 00:27:59,040
Speaker 4: Yeah, I think to some extent that is probably the case.

511
00:27:59,040 --> 00:28:02,119
Speaker 4: But I would say we probably have the ETFs to

512
00:28:02,160 --> 00:28:05,280
Speaker 4: blame for that, just because of the way the ETF

513
00:28:05,359 --> 00:28:07,560
Speaker 4: market is, and you know, a lot of what is

514
00:28:07,600 --> 00:28:12,000
Speaker 4: happening now is money flowing into ETFs, which then end

515
00:28:12,080 --> 00:28:15,960
Speaker 4: up buying you know, whatever is the underlying index of stocks,

516
00:28:16,520 --> 00:28:18,920
Speaker 4: and then you end up with these stocks that don't

517
00:28:18,920 --> 00:28:20,879
Speaker 4: have a lot of free flow, right, so you have

518
00:28:21,359 --> 00:28:24,320
Speaker 4: large inflows. I mean this is not just a US phenomena.

519
00:28:24,480 --> 00:28:26,920
Speaker 4: Like you look at what happened in Europe here to day, right,

520
00:28:27,240 --> 00:28:30,119
Speaker 4: the top five six stocks in market gap are up

521
00:28:30,200 --> 00:28:32,879
Speaker 4: like fifteen percent, right, and the same thing in Korea,

522
00:28:33,000 --> 00:28:36,080
Speaker 4: same thing now, So everywhere in the world, as more

523
00:28:36,160 --> 00:28:40,200
Speaker 4: money flows into these passive vehicles, I think it generates

524
00:28:40,240 --> 00:28:43,680
Speaker 4: this effect where people are just buying it, you know,

525
00:28:43,760 --> 00:28:47,680
Speaker 4: without actually looking at the valuation. So taken VideA, as

526
00:28:47,720 --> 00:28:49,560
Speaker 4: long as we have new money coming into the S

527
00:28:49,640 --> 00:28:52,160
Speaker 4: and P five hundred and video stocks going to go

528
00:28:52,280 --> 00:28:55,280
Speaker 4: up and until something happens, as earnings comes out or

529
00:28:55,320 --> 00:28:58,440
Speaker 4: some something else changes, this thing sort of drives the

530
00:28:58,520 --> 00:29:02,120
Speaker 4: momentum effect. The pods, I think have a little bit

531
00:29:02,160 --> 00:29:06,480
Speaker 4: to do with it, But I would imagine the typical

532
00:29:06,880 --> 00:29:11,160
Speaker 4: long short equity pod. You know, it's sector neutral and

533
00:29:11,520 --> 00:29:13,960
Speaker 4: market neutral and all kinds of neutrals. So basically they

534
00:29:14,000 --> 00:29:18,320
Speaker 4: try to neutralize every possible factor that they could lose

535
00:29:18,320 --> 00:29:20,880
Speaker 4: money against, right, And so that's what they do. I

536
00:29:20,880 --> 00:29:23,160
Speaker 4: actually think that they might be a new factor that

537
00:29:23,240 --> 00:29:26,440
Speaker 4: we might have to have, which is the multi factor

538
00:29:26,520 --> 00:29:29,959
Speaker 4: multi strategy pod factor, right, because this is a factor

539
00:29:30,040 --> 00:29:32,000
Speaker 4: like if you have a stock in which a lot

540
00:29:32,000 --> 00:29:35,160
Speaker 4: of multi strategy pods have a position, you know, that

541
00:29:35,240 --> 00:29:37,800
Speaker 4: might make that stock behave differently.

542
00:29:38,720 --> 00:29:40,600
Speaker 2: By the way, super Micro, I think it was up

543
00:29:40,640 --> 00:29:42,120
Speaker 2: about six what did I say? It was like up

544
00:29:42,160 --> 00:29:44,600
Speaker 2: about sixty dollars on the day when we started the episode.

545
00:29:45,080 --> 00:29:47,959
Speaker 2: It's up eighty anyone now. So when we see these

546
00:29:48,080 --> 00:29:50,360
Speaker 2: crazy moves on the upside, it's like, okay, there isn't

547
00:29:50,440 --> 00:29:54,520
Speaker 2: much free float. There's this sort of uninformed demand from

548
00:29:54,560 --> 00:29:56,720
Speaker 2: the ETF flows. And then when we see like the

549
00:29:56,760 --> 00:29:59,640
Speaker 2: crazy moves on the down it's a lot of pod

550
00:30:00,480 --> 00:30:02,840
Speaker 2: all with the same risk profiles. How quickly do they

551
00:30:02,840 --> 00:30:05,000
Speaker 2: get fired? Like in my mind like, oh they have

552
00:30:05,040 --> 00:30:06,920
Speaker 2: a bad few weeks or a bead quarter a bit.

553
00:30:07,040 --> 00:30:10,960
Speaker 2: What is the reality of like longevity And how quickly

554
00:30:11,000 --> 00:30:12,280
Speaker 2: do they just say you're not cutting.

555
00:30:12,040 --> 00:30:14,880
Speaker 4: It, you know, my guess And this is not you know,

556
00:30:14,920 --> 00:30:18,760
Speaker 4: by any way scientific you know sort of thing is probably,

557
00:30:19,120 --> 00:30:22,480
Speaker 4: you know, it's not very long, but you'd be surprised

558
00:30:22,520 --> 00:30:25,800
Speaker 4: that a lot of these fairly large platforms have managers

559
00:30:25,800 --> 00:30:29,280
Speaker 4: that have been around forever, right, and they all have

560
00:30:29,440 --> 00:30:31,760
Speaker 4: something in common. One of the things is if you

561
00:30:31,800 --> 00:30:34,720
Speaker 4: have a very high sharp ratio strategy, so a strategy

562
00:30:34,760 --> 00:30:39,080
Speaker 4: where you know you're boltild these small relative to your returns,

563
00:30:39,560 --> 00:30:42,480
Speaker 4: then you're more likely to survive in this sort of

564
00:30:42,560 --> 00:30:45,320
Speaker 4: pod environment, right because if you have you know your

565
00:30:45,360 --> 00:30:49,040
Speaker 4: drawdowns are limited, and then every once in a while

566
00:30:49,160 --> 00:30:51,520
Speaker 4: you might have a big blow up, but then you

567
00:30:51,560 --> 00:30:54,840
Speaker 4: know that's just part of the high sharp ratio game. Right.

568
00:30:54,880 --> 00:30:58,160
Speaker 4: So there's a very nice paper by Jean Philippe Buschat

569
00:30:58,240 --> 00:31:01,600
Speaker 4: that shows that most of these high sharp ratio strategies

570
00:31:01,960 --> 00:31:05,320
Speaker 4: often tend to have a negative sq to P an

571
00:31:05,400 --> 00:31:07,320
Speaker 4: L profile, which kind of makes sense. Like, if you're

572
00:31:07,360 --> 00:31:10,040
Speaker 4: going to sell s and P options every day, that's

573
00:31:10,040 --> 00:31:13,000
Speaker 4: going to be a very high sharp ratio strategy until

574
00:31:13,040 --> 00:31:15,640
Speaker 4: something happens and then you lose three four years with

575
00:31:15,760 --> 00:31:19,760
Speaker 4: a P and L. Right, So I think the longevity

576
00:31:20,080 --> 00:31:23,160
Speaker 4: of a typical part is not that high, but you'd

577
00:31:23,160 --> 00:31:27,200
Speaker 4: be surprised how many of these managers have done extremely

578
00:31:27,240 --> 00:31:30,240
Speaker 4: well over time because they have this sort of high

579
00:31:30,280 --> 00:31:34,000
Speaker 4: sharp ratio strategies that they can then survive.

580
00:31:34,600 --> 00:31:38,360
Speaker 3: Some of this reminds me of the original discussion I

581
00:31:38,440 --> 00:31:41,000
Speaker 3: guess it would have been more than ten years ago now,

582
00:31:41,040 --> 00:31:45,520
Speaker 3: but around algorithmic or machine learning trading, where like the

583
00:31:45,560 --> 00:31:48,760
Speaker 3: big discussion point was, Okay, you get a news release

584
00:31:49,040 --> 00:31:52,920
Speaker 3: that comes out, maybe it's something company specific, maybe it's

585
00:31:52,960 --> 00:31:56,960
Speaker 3: something macro, like the latest jobs release, and all the

586
00:31:57,040 --> 00:32:01,040
Speaker 3: machines react to it. Sometimes they actually are read or

587
00:32:01,040 --> 00:32:03,480
Speaker 3: at least back then, they would pull back from the

588
00:32:03,520 --> 00:32:05,480
Speaker 3: market and just wait a little bit. But the idea

589
00:32:05,560 --> 00:32:08,240
Speaker 3: is that you kind of get this gap where if

590
00:32:08,240 --> 00:32:11,479
Speaker 3: you're not a machine or an algorithm, maybe there's an

591
00:32:11,560 --> 00:32:15,920
Speaker 3: opportunity there in the market. Maybe you can be smarter

592
00:32:16,120 --> 00:32:18,160
Speaker 3: I guess than the machines that are sort of like

593
00:32:18,320 --> 00:32:20,480
Speaker 3: going on on wrote code.

594
00:32:20,840 --> 00:32:22,760
Speaker 4: Yeah. I think, if you think about it, the biggest

595
00:32:22,800 --> 00:32:27,000
Speaker 4: opportunities for slightly longer term investors. So if you are

596
00:32:27,520 --> 00:32:30,280
Speaker 4: let's say your time horizon is not a month or

597
00:32:30,360 --> 00:32:33,640
Speaker 4: three months now, this gives you a greater opportunity because

598
00:32:33,640 --> 00:32:37,640
Speaker 4: you obviously get these big drawdowns every few months. Right.

599
00:32:37,720 --> 00:32:40,800
Speaker 4: So so in my personal view, I think, you know,

600
00:32:40,840 --> 00:32:43,240
Speaker 4: we have some active ETFs and and that we think

601
00:32:43,280 --> 00:32:46,440
Speaker 4: of that as longer term capital, and we're looking at

602
00:32:46,480 --> 00:32:49,640
Speaker 4: creating some sort of a drawdown structure where we actually

603
00:32:50,160 --> 00:32:53,440
Speaker 4: wait for these big drawdowns that are caused by the

604
00:32:53,480 --> 00:32:57,600
Speaker 4: pods and then use that to actually participate in these

605
00:32:58,040 --> 00:33:00,360
Speaker 4: in these moves. And then that in case, could be

606
00:33:00,400 --> 00:33:04,600
Speaker 4: a very interesting way to take advantage of this stuff.

607
00:33:04,960 --> 00:33:08,040
Speaker 4: But anytime you have in al garden that decides how

608
00:33:08,120 --> 00:33:11,880
Speaker 4: capital gets allocated and it's sort of rule space, you

609
00:33:12,120 --> 00:33:14,080
Speaker 4: kind of know that it's going to create a problem

610
00:33:14,160 --> 00:33:17,000
Speaker 4: the end, because the market is sort of a complex machine.

611
00:33:17,280 --> 00:33:20,280
Speaker 4: So anytime you think you've found like some risk mousetrap,

612
00:33:20,680 --> 00:33:23,800
Speaker 4: you know it's probably going to create other issues elsewhere.

613
00:33:24,320 --> 00:33:26,160
Speaker 3: This might be a simplistic question, but how do you

614
00:33:26,160 --> 00:33:28,800
Speaker 3: measure drawdowns? How do you know that those are happening

615
00:33:28,920 --> 00:33:32,200
Speaker 3: and impacting a particular stock or factor.

616
00:33:32,760 --> 00:33:34,920
Speaker 4: So you can kind of look at that on a

617
00:33:35,360 --> 00:33:38,840
Speaker 4: kind of a micro scale by certain specific assets that

618
00:33:38,880 --> 00:33:42,080
Speaker 4: are in focus. So for instance, like let's say you're

619
00:33:42,120 --> 00:33:44,920
Speaker 4: going into an earnings release and you sort of see

620
00:33:44,960 --> 00:33:48,520
Speaker 4: that the stock missed earnings and then has a massive

621
00:33:48,560 --> 00:33:52,480
Speaker 4: reaction and it's a several sigma move, and you'd sort

622
00:33:52,480 --> 00:33:55,200
Speaker 4: of say, like, Okay, the company did miss earnings dis quarter,

623
00:33:55,600 --> 00:33:59,320
Speaker 4: but otherwise everything else seems to be fine. It shouldn't

624
00:33:59,360 --> 00:34:01,800
Speaker 4: be as big reaction. And you can kind of look

625
00:34:01,840 --> 00:34:05,240
Speaker 4: at these reactions from the past when they've missed earnings

626
00:34:05,560 --> 00:34:07,400
Speaker 4: and you'd find that, you know, the reactions are much

627
00:34:07,480 --> 00:34:10,040
Speaker 4: larger now, and part of that has to do with

628
00:34:10,080 --> 00:34:13,640
Speaker 4: the fact that a lot of the capital that is deployed,

629
00:34:13,760 --> 00:34:17,120
Speaker 4: apart from the ETFs, which are passive holders of this stuff,

630
00:34:17,520 --> 00:34:20,200
Speaker 4: the active management part of it is a lot of

631
00:34:20,200 --> 00:34:23,680
Speaker 4: these pots and multi strategy fonts, and that creates this

632
00:34:23,840 --> 00:34:27,400
Speaker 4: sort of behavior, not just inequities, but in other assets

633
00:34:27,440 --> 00:34:30,960
Speaker 4: as well. Like you'd get a really massive reaction in

634
00:34:31,000 --> 00:34:34,120
Speaker 4: treasuries for like some random thing, and you'd be like,

635
00:34:34,560 --> 00:34:37,319
Speaker 4: what has changed, Like economy hasn't really changed that much,

636
00:34:37,960 --> 00:34:42,160
Speaker 4: but because like everybody was one way now they all

637
00:34:42,200 --> 00:34:43,960
Speaker 4: have to kind of get out of the way, and

638
00:34:44,000 --> 00:34:47,040
Speaker 4: that creates like, like, take this CPI reaction. I mean,

639
00:34:47,239 --> 00:34:49,839
Speaker 4: you know, we had a big repricing the front end,

640
00:34:49,880 --> 00:34:52,000
Speaker 4: which kind of made sense, but you look at the

641
00:34:52,080 --> 00:34:54,600
Speaker 4: treasury move and you say, like, ah, does it really

642
00:34:54,800 --> 00:34:57,360
Speaker 4: make a big difference. In the grand scheme of things,

643
00:34:57,840 --> 00:35:01,480
Speaker 4: the one year forward ten years yields and the five

644
00:35:01,560 --> 00:35:04,760
Speaker 4: year yields are about the same. They are about four percent,

645
00:35:05,239 --> 00:35:09,839
Speaker 4: and so that hasn't really changed. But people's positions had

646
00:35:09,880 --> 00:35:13,680
Speaker 4: to be unbound, and that creates these sort of large reactions.

647
00:35:14,200 --> 00:35:16,359
Speaker 3: So one thing I was wondering, just going back to

648
00:35:16,680 --> 00:35:20,800
Speaker 3: why these types of investment firms seem to have proliferated

649
00:35:20,960 --> 00:35:23,880
Speaker 3: in recent years. I mean, to some extent, this was

650
00:35:24,239 --> 00:35:28,399
Speaker 3: the desired outcome of post two thousand and eight regulation. Again,

651
00:35:28,440 --> 00:35:32,160
Speaker 3: you make it more expensive to get leverage if you're

652
00:35:32,320 --> 00:35:34,880
Speaker 3: a bank. If you're a bank, you also can't trade

653
00:35:34,880 --> 00:35:38,040
Speaker 3: for your own account anymore, and so it all shifts

654
00:35:38,080 --> 00:35:41,880
Speaker 3: into I kind of hate this term nowadays, but the

655
00:35:41,920 --> 00:35:45,120
Speaker 3: shadow banking system, and it gets done there. So I

656
00:35:45,160 --> 00:35:49,640
Speaker 3: guess my question is how worried should we be about

657
00:35:49,800 --> 00:35:55,920
Speaker 3: this activity on a systemic basis? And then secondly, could

658
00:35:56,040 --> 00:36:00,840
Speaker 3: multi strategy pod shops be hit if we were to

659
00:36:01,000 --> 00:36:05,040
Speaker 3: see leverage get more expensive. So, for instance, there's a

660
00:36:05,040 --> 00:36:07,840
Speaker 3: lot of talk right now about the basis trade in

661
00:36:07,960 --> 00:36:11,520
Speaker 3: treasuries and maybe regulators are going to start cracking down

662
00:36:11,560 --> 00:36:14,840
Speaker 3: on that or making it more expensive to use treasury futures,

663
00:36:14,880 --> 00:36:17,320
Speaker 3: which are basically a source of leverage in that market.

664
00:36:17,520 --> 00:36:18,399
Speaker 3: Is that a risk here?

665
00:36:19,160 --> 00:36:21,520
Speaker 4: Think? I think on the second question, there's definitely a

666
00:36:21,600 --> 00:36:24,520
Speaker 4: risk that the cost of leverage goes up. From a

667
00:36:24,560 --> 00:36:28,800
Speaker 4: systemic point of view, if banks are financing these trades,

668
00:36:28,920 --> 00:36:33,560
Speaker 4: and if that financing business gets charged more in risk capital,

669
00:36:33,960 --> 00:36:37,560
Speaker 4: then you would imagine that you know, the traction of

670
00:36:38,120 --> 00:36:42,120
Speaker 4: some of the pots become less attractive because if imagine

671
00:36:42,200 --> 00:36:45,560
Speaker 4: I have to fund my book at ten percent when

672
00:36:46,120 --> 00:36:49,080
Speaker 4: risk rere rates are five percent, then I'm less likely

673
00:36:49,200 --> 00:36:52,399
Speaker 4: to find any GOO opportunities, right, I mean, I'm still

674
00:36:52,400 --> 00:36:55,200
Speaker 4: going to find something, but not as much of these

675
00:36:55,640 --> 00:36:58,600
Speaker 4: R type stuff. But the other aspect of it is

676
00:36:58,640 --> 00:37:02,000
Speaker 4: like what they're really so I think, which is like

677
00:37:02,080 --> 00:37:05,279
Speaker 4: one of the positives of the multistrat funds is that

678
00:37:05,480 --> 00:37:08,080
Speaker 4: like unlike a fund of funds where you couldn't net

679
00:37:08,320 --> 00:37:12,239
Speaker 4: risks together, here you're able to net all this exposure. Right,

680
00:37:12,280 --> 00:37:15,400
Speaker 4: So imagine you have one person long of Tesla and

681
00:37:15,440 --> 00:37:18,319
Speaker 4: the other person short of Tesla. Now you as the

682
00:37:18,680 --> 00:37:22,360
Speaker 4: end investor, doesn't have to have these two positions and

683
00:37:22,560 --> 00:37:25,799
Speaker 4: two different hedge funds. They're all getting netted and you're

684
00:37:25,840 --> 00:37:30,840
Speaker 4: only getting charged for the net exposure cross margining, cross margining,

685
00:37:30,960 --> 00:37:33,520
Speaker 4: which has been a big challenge. So if you're a

686
00:37:33,640 --> 00:37:36,719
Speaker 4: single manager fund and let's say you're invested in like

687
00:37:36,800 --> 00:37:39,880
Speaker 4: ten different single manager funds, you know what if like

688
00:37:39,960 --> 00:37:42,200
Speaker 4: five of them along of Tesla and the other five

689
00:37:42,200 --> 00:37:45,480
Speaker 4: were short, Now your problem is you're on a net

690
00:37:45,520 --> 00:37:46,680
Speaker 4: basis kind of flat.

691
00:37:47,000 --> 00:37:48,360
Speaker 2: You're paying for everyone's leverage.

692
00:37:48,400 --> 00:37:50,640
Speaker 4: You're paid for everyone's leverage, and so that is like

693
00:37:50,680 --> 00:37:54,319
Speaker 4: a big advantage I think of having this sort of thing.

694
00:37:54,400 --> 00:37:57,080
Speaker 4: But on the flip side, right, if you think about it,

695
00:37:57,440 --> 00:38:01,920
Speaker 4: if imagine you have five pods, there are long of

696
00:38:01,960 --> 00:38:04,799
Speaker 4: Tesla and five pods that are short of Tesla, just

697
00:38:04,840 --> 00:38:08,359
Speaker 4: to take a simple example, and Tesla goes up. Now,

698
00:38:08,640 --> 00:38:12,359
Speaker 4: typical multi strategy investor takes all the netting risks. So

699
00:38:13,000 --> 00:38:16,520
Speaker 4: historically in edge fund, if you invested in edge fund

700
00:38:16,520 --> 00:38:18,440
Speaker 4: and the edge fund didn't make money, you didn't pay

701
00:38:18,480 --> 00:38:21,799
Speaker 4: any fees to the manager. But now with the pod

702
00:38:21,880 --> 00:38:25,399
Speaker 4: structure and the multi strategy platform, the people who made

703
00:38:25,440 --> 00:38:28,279
Speaker 4: the money are getting their payouts and then the ones

704
00:38:28,320 --> 00:38:31,640
Speaker 4: that lost money, now you're actually taking the losses. So

705
00:38:32,040 --> 00:38:35,680
Speaker 4: if you have too much dispersion, that's not necessarily good

706
00:38:37,400 --> 00:38:39,480
Speaker 4: from a overall perspective.

707
00:38:39,400 --> 00:38:43,000
Speaker 3: And what about the systemic aspects of all of this? So, yes, Okay,

708
00:38:43,120 --> 00:38:46,000
Speaker 3: there are some weird moves in the market, and maybe

709
00:38:46,000 --> 00:38:50,040
Speaker 3: there's more short termism and we're getting bigger reactions to

710
00:38:50,640 --> 00:38:54,080
Speaker 3: one off events or announcements. But is it an issue

711
00:38:54,120 --> 00:38:56,840
Speaker 3: that we should be worried about? Should regulators be thinking

712
00:38:56,840 --> 00:38:57,200
Speaker 3: about this?

713
00:38:57,960 --> 00:39:00,360
Speaker 4: Well, I think the issue is less to do with

714
00:39:00,600 --> 00:39:02,759
Speaker 4: the day to day stuff. It's more to do with

715
00:39:02,840 --> 00:39:05,879
Speaker 4: these events, right, So I think the risk becomes more

716
00:39:06,000 --> 00:39:09,399
Speaker 4: material when you go into any sort of event that

717
00:39:09,440 --> 00:39:13,320
Speaker 4: we're not thinking about, Like, for instance, let's say EMP

718
00:39:13,440 --> 00:39:16,839
Speaker 4: strike happens and all the great costs. Obviously we would

719
00:39:16,880 --> 00:39:19,640
Speaker 4: be thinking about other things at that point, But just

720
00:39:19,680 --> 00:39:22,440
Speaker 4: to make an example of something that we're not thinking about,

721
00:39:22,520 --> 00:39:26,400
Speaker 4: if that would happen, we could have big systemic unwinds

722
00:39:26,400 --> 00:39:29,799
Speaker 4: of positions just because of the way risk is managed. Right,

723
00:39:29,880 --> 00:39:32,400
Speaker 4: And this is just natural, Like if you have a

724
00:39:32,760 --> 00:39:35,600
Speaker 4: system where there's a lot of leverage and it's being

725
00:39:35,640 --> 00:39:38,600
Speaker 4: tightly risk managed, you know you're going to create these

726
00:39:38,640 --> 00:39:39,680
Speaker 4: unwinds over time.

727
00:39:40,160 --> 00:39:44,000
Speaker 2: I'm curious about the non systemic risks to the model,

728
00:39:44,080 --> 00:39:46,160
Speaker 2: and by that I mean like there have been a

729
00:39:46,160 --> 00:39:49,640
Speaker 2: lot of new hedge fund launches over the last several months.

730
00:39:49,640 --> 00:39:51,759
Speaker 2: I keep seeing headlines on the Bloomberg, many of them

731
00:39:51,840 --> 00:39:54,879
Speaker 2: with the multi strap model. I imagine many people at

732
00:39:55,000 --> 00:39:57,680
Speaker 2: multi strategy hedge funds want to be the guy on

733
00:39:57,760 --> 00:39:59,960
Speaker 2: top rather than the pod with the you know, always

734
00:40:00,040 --> 00:40:02,360
Speaker 2: having to worry about is their capital being pulled, so

735
00:40:02,440 --> 00:40:05,720
Speaker 2: they leave and start something new. The returns for several

736
00:40:05,719 --> 00:40:08,680
Speaker 2: of the existing ones are pretty extraordinary. Last year, I

737
00:40:08,760 --> 00:40:12,400
Speaker 2: think Citadel's the Wellington Fund, it was up over fifteen percent,

738
00:40:12,480 --> 00:40:17,160
Speaker 2: like really pretty solid year. Sitting aside systemic events is

739
00:40:17,200 --> 00:40:20,560
Speaker 2: the risk that's just like the strategy is no longer

740
00:40:20,600 --> 00:40:22,560
Speaker 2: as good the more people into it, because typically that's

741
00:40:22,640 --> 00:40:24,880
Speaker 2: how it is. You just think about with investing, various

742
00:40:24,920 --> 00:40:27,960
Speaker 2: quant strategies eventually don't work when everyone figures out the

743
00:40:28,000 --> 00:40:30,960
Speaker 2: abnormality or whatever. What do you think about, like the

744
00:40:31,080 --> 00:40:33,919
Speaker 2: long term prospects of good returns in this space as

745
00:40:34,040 --> 00:40:35,719
Speaker 2: more people try to do the same thing.

746
00:40:36,160 --> 00:40:37,759
Speaker 4: I think it's a great question. So I think that

747
00:40:38,040 --> 00:40:41,680
Speaker 4: smaller you are, the better your advantages, because you know,

748
00:40:41,880 --> 00:40:43,400
Speaker 4: if you go back to what I was saying before,

749
00:40:43,880 --> 00:40:46,319
Speaker 4: if you have a one hundred bie hundred long short

750
00:40:46,360 --> 00:40:49,239
Speaker 4: equity book, you could get out of it immediately. Right,

751
00:40:49,320 --> 00:40:52,839
Speaker 4: if you have a fairly large book, it's nearly impossible

752
00:40:53,040 --> 00:40:56,200
Speaker 4: to get out. There's no exit liquidity for the traits. Right,

753
00:40:56,400 --> 00:40:59,000
Speaker 4: So the size is a major factor in terms of

754
00:40:59,040 --> 00:41:02,280
Speaker 4: how they would perfer over time. Now, what does happen

755
00:41:02,400 --> 00:41:06,360
Speaker 4: is the larger funds tend to have better financing terms

756
00:41:06,400 --> 00:41:08,759
Speaker 4: because they've been around the longer, and so they've locked

757
00:41:08,840 --> 00:41:11,080
Speaker 4: up all the funding and you know, so there is

758
00:41:11,080 --> 00:41:14,960
Speaker 4: a definite benefit for the size. But from a forwardlooking

759
00:41:15,000 --> 00:41:18,080
Speaker 4: return basis, you're going to be much better served in

760
00:41:18,200 --> 00:41:21,120
Speaker 4: smaller multi strategy funds because the multi strategy as a

761
00:41:21,120 --> 00:41:23,759
Speaker 4: concept is not a bad idea, it's just that the

762
00:41:23,920 --> 00:41:27,960
Speaker 4: sizes become so big. And also, think about like how

763
00:41:28,280 --> 00:41:31,799
Speaker 4: these managers are moving around, Right, So imagine somebody had

764
00:41:31,840 --> 00:41:35,839
Speaker 4: a great alpha source some secret sauce, and they worked

765
00:41:35,840 --> 00:41:38,640
Speaker 4: at a fund and now their junior person moved to

766
00:41:38,719 --> 00:41:40,960
Speaker 4: the fund across the street and starts to do the

767
00:41:41,000 --> 00:41:44,480
Speaker 4: same thing. Now, essentially that's what's happening is most of

768
00:41:44,520 --> 00:41:47,759
Speaker 4: these strategies are the alpha is kind of decaying, right,

769
00:41:47,800 --> 00:41:51,440
Speaker 4: because you have all the migration of people. So you

770
00:41:51,840 --> 00:41:56,120
Speaker 4: might say you have fifty or forty multi strategy funds,

771
00:41:56,560 --> 00:42:00,000
Speaker 4: but they might all be doing something very similar, right,

772
00:42:00,440 --> 00:42:02,799
Speaker 4: And so that's I think is going to mean that

773
00:42:03,040 --> 00:42:07,040
Speaker 4: overall returns might not be as attractive as they have

774
00:42:07,120 --> 00:42:08,480
Speaker 4: been in the past. I mean, and some of the

775
00:42:08,719 --> 00:42:11,640
Speaker 4: multi strategy funds I mean spectacular, right, Like look at

776
00:42:11,680 --> 00:42:13,719
Speaker 4: Citadel that you mentioned, they've been phenomenal.

777
00:42:14,200 --> 00:42:15,959
Speaker 2: Millennium had year last year.

778
00:42:16,080 --> 00:42:18,000
Speaker 4: They've been great. I mean, so in the past they've

779
00:42:18,000 --> 00:42:21,080
Speaker 4: been phenomenal. But on a going forward basis, as this

780
00:42:21,280 --> 00:42:23,799
Speaker 4: thing gets bigger and bigger, you would imagine that the

781
00:42:23,840 --> 00:42:27,040
Speaker 4: alpha kind of comes down. You don't have as many people.

782
00:42:27,600 --> 00:42:30,840
Speaker 4: So if you take a typical multi strategy fund, the

783
00:42:30,880 --> 00:42:33,480
Speaker 4: person who starts out starts out with two three hundred

784
00:42:33,560 --> 00:42:36,359
Speaker 4: million to manage. So if you have a trillion two

785
00:42:36,640 --> 00:42:40,040
Speaker 4: of capital, you're going to need forty thousand different parts.

786
00:42:40,719 --> 00:42:43,240
Speaker 4: I mean, not every part is you know that size.

787
00:42:43,280 --> 00:42:45,239
Speaker 4: A lot of parts are much bigger. But you know,

788
00:42:45,480 --> 00:42:47,319
Speaker 4: you can just think about a number of people that

789
00:42:47,320 --> 00:42:51,279
Speaker 4: you're going to require and enough orthogonal strategies, and I

790
00:42:51,360 --> 00:42:54,960
Speaker 4: just don't think there's that many you know, orthogonal strategies

791
00:42:55,000 --> 00:42:55,719
Speaker 4: out there.

792
00:42:55,880 --> 00:42:59,200
Speaker 3: So this might be getting ahead of ourselves a little bit,

793
00:42:59,360 --> 00:43:02,880
Speaker 3: but we started out describing the evolution of hedge funds.

794
00:43:02,960 --> 00:43:05,040
Speaker 3: So going from the two and twenty model to fund

795
00:43:05,080 --> 00:43:08,239
Speaker 3: of funds and then multi strategy, what's next in the

796
00:43:08,280 --> 00:43:11,720
Speaker 3: evolution if there is a risk of overcrowding and alpha

797
00:43:11,719 --> 00:43:15,239
Speaker 3: decay as you just described, what's the next big thing

798
00:43:15,280 --> 00:43:15,840
Speaker 3: on the radar?

799
00:43:16,400 --> 00:43:18,879
Speaker 4: So I think that this will evolve. You know, it'll

800
00:43:18,880 --> 00:43:21,520
Speaker 4: take time obviously, because you know, you'll need a few

801
00:43:21,560 --> 00:43:25,720
Speaker 4: years of underperformance before people say like, oh, this doesn't work.

802
00:43:26,040 --> 00:43:28,799
Speaker 4: But in my mind, the two things I'm betting on

803
00:43:29,080 --> 00:43:32,640
Speaker 4: is one is obviously anything that takes advantage of this

804
00:43:32,760 --> 00:43:35,919
Speaker 4: sort of you know behavior right where you're being risk

805
00:43:36,000 --> 00:43:39,440
Speaker 4: managed and forced unwined positions. So if you can actually

806
00:43:39,480 --> 00:43:42,719
Speaker 4: have slightly longer term capital, you can actually be the

807
00:43:42,760 --> 00:43:45,759
Speaker 4: person going and buying the stuff when everybody has to sell, right,

808
00:43:45,800 --> 00:43:48,000
Speaker 4: So that's a bigger opportunity I think. And then the

809
00:43:48,040 --> 00:43:51,440
Speaker 4: other one is any sort of long term capital structure

810
00:43:51,640 --> 00:43:54,160
Speaker 4: like an ETF or any of that sort of stuff,

811
00:43:54,520 --> 00:43:57,759
Speaker 4: because what happens there is that an ETF investor is

812
00:43:57,800 --> 00:44:01,160
Speaker 4: not like looking at it every single I mean, although

813
00:44:01,160 --> 00:44:03,680
Speaker 4: some might be, but most of them are investing for

814
00:44:03,719 --> 00:44:06,000
Speaker 4: the long term, right, So if you could sort of

815
00:44:06,080 --> 00:44:08,200
Speaker 4: manage that sort of money, then you get the ability

816
00:44:08,239 --> 00:44:09,760
Speaker 4: to actually sit through all these things.

817
00:44:10,480 --> 00:44:13,120
Speaker 2: Christiana Kumar, Goose Hollow Capital, thank you so much for

818
00:44:13,160 --> 00:44:13,920
Speaker 2: coming on of love.

819
00:44:14,440 --> 00:44:15,239
Speaker 3: That was so good.

820
00:44:15,360 --> 00:44:17,359
Speaker 4: Thank you, Thanks Gus.

821
00:44:29,400 --> 00:44:32,520
Speaker 2: Tracy. I really enjoyed that conversation. There was a lot

822
00:44:32,560 --> 00:44:34,520
Speaker 2: in there that was interesting to me. I think where

823
00:44:34,560 --> 00:44:37,280
Speaker 2: I would start was actually maybe with that last answer,

824
00:44:37,320 --> 00:44:40,080
Speaker 2: where it sort of seems like, you know, the one

825
00:44:40,200 --> 00:44:44,239
Speaker 2: thing that a POD seemingly cannot do is just that

826
00:44:44,320 --> 00:44:47,480
Speaker 2: sort of like long by and whole philosophy, right, Like

827
00:44:47,560 --> 00:44:50,440
Speaker 2: that's the one sort of bread and butter investment strategy

828
00:44:50,440 --> 00:44:52,799
Speaker 2: that you probably can't do when you're being short term

829
00:44:52,840 --> 00:44:55,080
Speaker 2: managed like that. So in the end, like the sort

830
00:44:55,080 --> 00:44:57,640
Speaker 2: of benefits may accrue to those who can just and

831
00:44:57,680 --> 00:45:00,600
Speaker 2: it's like what every financial advisor says, like right by

832
00:45:00,600 --> 00:45:03,000
Speaker 2: the index and like stocks go up, go about the

833
00:45:03,000 --> 00:45:03,800
Speaker 2: rest of your life.

834
00:45:03,880 --> 00:45:07,440
Speaker 3: Yeah, absolutely, that really crystallized that point, the idea of

835
00:45:07,520 --> 00:45:11,200
Speaker 3: like it's the time horizon. Yeah, that is different here.

836
00:45:11,480 --> 00:45:14,239
Speaker 3: And also you know, the crowding behavior. I was sort

837
00:45:14,239 --> 00:45:17,080
Speaker 3: of thinking back, do you remember flows before pros?

838
00:45:17,239 --> 00:45:18,120
Speaker 2: Yeah, that's your life.

839
00:45:18,239 --> 00:45:21,279
Speaker 3: Yeah, So the idea there was that, Okay, in an

840
00:45:21,400 --> 00:45:24,919
Speaker 3: environment of low returns sort of post two thousand and eight,

841
00:45:25,040 --> 00:45:30,320
Speaker 3: that it's hard to find you know, genuine like outperformance,

842
00:45:30,320 --> 00:45:32,480
Speaker 3: and so the best thing to do is just follow

843
00:45:32,520 --> 00:45:35,279
Speaker 3: the crowd, and that's how you kind of eke out alpha.

844
00:45:35,360 --> 00:45:36,880
Speaker 3: And then I'm thinking about it in the context of

845
00:45:36,880 --> 00:45:39,360
Speaker 3: the multi strategy firms, and I'm kind of thinking, like,

846
00:45:39,840 --> 00:45:42,680
Speaker 3: maybe pros create flows. Now, maybe that's what the multi

847
00:45:42,680 --> 00:45:44,759
Speaker 3: strategy firms are doing, Like they're just going in and

848
00:45:44,760 --> 00:45:45,960
Speaker 3: out on a daily basis.

849
00:45:46,200 --> 00:45:48,440
Speaker 2: Yeah, it's exactly that. Like I knew that there was

850
00:45:48,560 --> 00:45:51,719
Speaker 2: a lot of trading volume that came from there, but

851
00:45:51,760 --> 00:45:54,600
Speaker 2: I don't think I like totally understood why they had

852
00:45:54,640 --> 00:45:56,960
Speaker 2: to trade. So yeah, like why not just you know,

853
00:45:57,040 --> 00:45:59,279
Speaker 2: invest in some text docs and they probably go up.

854
00:45:59,400 --> 00:46:01,160
Speaker 2: But if you think it was, like, no, you're really

855
00:46:01,200 --> 00:46:03,720
Speaker 2: like not being paid to just like take a long

856
00:46:03,800 --> 00:46:06,440
Speaker 2: term view or anything. Because the long term is for

857
00:46:06,480 --> 00:46:08,880
Speaker 2: the end investors. The long term is for the LPs

858
00:46:08,960 --> 00:46:12,520
Speaker 2: and everyone else. Like your job is short term performance,

859
00:46:12,520 --> 00:46:14,239
Speaker 2: and you sort of like diversify it that way, and

860
00:46:14,320 --> 00:46:16,480
Speaker 2: it benefits the long term. There's just a lot of

861
00:46:16,520 --> 00:46:20,080
Speaker 2: interesting things about there so much isolating aspects. There's also

862
00:46:20,120 --> 00:46:22,000
Speaker 2: you know, like it makes so much sense about like

863
00:46:22,160 --> 00:46:25,400
Speaker 2: the capital efficiency of pod shops versus the fund of funds,

864
00:46:25,400 --> 00:46:27,080
Speaker 2: which no one enjoy tell like all these things like

865
00:46:27,120 --> 00:46:28,360
Speaker 2: sort of make a lot of sense to me.

866
00:46:28,480 --> 00:46:28,640
Speaker 4: Now.

867
00:46:28,840 --> 00:46:31,040
Speaker 3: Yeah, the other thing I would call out is the

868
00:46:31,120 --> 00:46:34,720
Speaker 3: leverage point. And again this has been going on for

869
00:46:34,719 --> 00:46:37,040
Speaker 3: for sort of a long time. And again I would

870
00:46:37,040 --> 00:46:40,160
Speaker 3: call back to the lack of returns in the post

871
00:46:40,239 --> 00:46:42,520
Speaker 3: two thousand and eight environment. That's when we saw people

872
00:46:42,640 --> 00:46:45,640
Speaker 3: start to use a whole host of intro well not start,

873
00:46:46,280 --> 00:46:49,799
Speaker 3: but using a whole host of interesting derivatives and like

874
00:46:49,880 --> 00:46:53,200
Speaker 3: CDX index options to bet on corporate credit because you

875
00:46:53,239 --> 00:46:56,399
Speaker 3: had that general macro environment as well. Things are sort

876
00:46:56,440 --> 00:46:59,320
Speaker 3: of evolving now. But I take the point, Okay, leverage

877
00:46:59,360 --> 00:47:02,120
Speaker 3: is expensive, particularly if you're a bank, and that's part

878
00:47:02,120 --> 00:47:05,560
Speaker 3: of the reason we've seen it migrate in some respects

879
00:47:05,560 --> 00:47:08,720
Speaker 3: to multi strategy funds. But I am interested to see

880
00:47:09,200 --> 00:47:12,680
Speaker 3: if that kind of war, the regulatory war on leverage

881
00:47:13,040 --> 00:47:16,080
Speaker 3: starts to pick up, because we have seen again going

882
00:47:16,120 --> 00:47:18,839
Speaker 3: back to the basis trade and treasury futures. A lot

883
00:47:18,840 --> 00:47:22,160
Speaker 3: of noises about that, and so yeah, definitely something to

884
00:47:22,200 --> 00:47:22,719
Speaker 3: keep an eye on.

885
00:47:22,840 --> 00:47:26,280
Speaker 2: Yeah, there's a lot there also just that point about like, okay,

886
00:47:26,719 --> 00:47:28,440
Speaker 2: you know it used to be that the sort of

887
00:47:28,480 --> 00:47:31,640
Speaker 2: proprietary trader at the bank could take advantage of some

888
00:47:31,960 --> 00:47:35,279
Speaker 2: weird dislocation when an investor needs to sell some off

889
00:47:35,280 --> 00:47:37,920
Speaker 2: the run treasuries and there may be not be an

890
00:47:37,920 --> 00:47:39,880
Speaker 2: obvious buyer for at the moment and you like pocket

891
00:47:39,960 --> 00:47:42,040
Speaker 2: a little bit of money. Yeah, and how okay.

892
00:47:41,840 --> 00:47:44,320
Speaker 3: That that balance sheet that was available.

893
00:47:44,080 --> 00:47:46,520
Speaker 2: Yeah, for those types of trades, and how that creates

894
00:47:46,520 --> 00:47:49,440
Speaker 2: opportunities for these funds and the specialists in these areas

895
00:47:49,440 --> 00:47:51,880
Speaker 2: to identify the as any really interesting conversation.

896
00:47:52,200 --> 00:47:54,120
Speaker 3: So much and there shall we leave it there for now.

897
00:47:54,200 --> 00:47:54,919
Speaker 2: Let's leave it there.

898
00:47:55,000 --> 00:47:55,360
Speaker 4: Okay.

899
00:47:55,560 --> 00:47:58,400
Speaker 3: This has been another episode of the All Thoughts podcast.

900
00:47:58,480 --> 00:48:01,160
Speaker 3: I'm Tracy Alloway. You can follow me at Tracy.

901
00:48:00,840 --> 00:48:03,719
Speaker 2: Alloway and I'm Jill Wisenthal. You can follow me at

902
00:48:03,719 --> 00:48:07,240
Speaker 2: the Stalwart. Follow our producers Kerman Rodriguez at Kerman Ermann,

903
00:48:07,320 --> 00:48:11,279
Speaker 2: Dashel Bennett at Dashbod Kilbrooks at Keilbrooks and Thank you

904
00:48:11,320 --> 00:48:14,320
Speaker 2: to our producer Moses On. For more Oddlots content, go

905
00:48:14,360 --> 00:48:17,239
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916
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